Revealed: How foreign buyers have bought £100bn of London property in six years

Posted On: October 21, 2015

Wealthy investors have snapped up at least £100 billion of property across London using overseas companies in the past six years, new figures reveal today.

Official data seen by the Standard shows that since 2008 there have been 27,989 purchases of homes, buildings and land in the capital by shadowy corporate structures usually registered in tax havens to hide the buyers’ identities.

The stampede of investment has been blamed for pushing property prices beyond Londoners’ reach and in some cases has been linked with money laundering and tax evasion.

Two-thirds of the purchases were made by companies registered in just four “British” tax havens — Jersey, Guernsey, the Isle of Man and the British Virgin Islands, according to the Land Registry data obtained by Private Eye magazine through freedom of information requests.

It found that properties sold to overseas firms included homes, commercial buildings, land, parking spaces and even the “airspace and structures” at Aldgate East Tube station.

Individual buyers often prefer to make their purchases through corporate structures to keep their names out of any official records and for inheritance and capital gains tax purposes. Until 2013 the structures could also be used to avoid stamp duty, though the Chancellor has since closed that loophole.

Hundreds of the biggest property deals over recent years in London have been made through companies, the vast majority with wealthy foreign individuals behind them.

The Metropolitan Police this year revealed that British property purchases worth more than £180 million were being investigated as the likely proceeds of corruption — almost all bought through offshore companies.

When Saadi Gaddafi, playboy son of the late Libyan tyrant, had his £10 million Hampstead Garden Suburb mansion seized in 2012, it emerged that the eight-bedroom home was bought in the name of a British Virgin Islands firm called Capitana Seas Ltd.

Private Eye’s research also reveals that almost all of the homes on London’s most expensive street Kensington Palace Gardens — where the Crown Estate owns the freeholds — have been purchased through firms based in Delaware, Cyprus, St Vincent and the Grenadines, the British Virgin Islands and the Bahamas.

A 2013 investigation of the One Hyde Park development in Knightsbridge found 64 of the 76 apartments then sold had been bought via corporations.

The Land Registry figures also show that in just one deal signed off by Boris Johnson in 2011, at Riverlight Quay in the Nine Elms regeneration area, 15 per cent of the homes sold so far have been bought by foreign firms.

Green London Assembly member Darren Johnson said: “The Mayor has been too relaxed about investors buying property in London.

“These figures show a huge volume snapped up via tax havens — and whether it’s laundering money through a Chelsea mansion or dodging tax in a major regeneration project, Londoners are losing out.”

“I want the Mayor’s deputy to be frank with the big property developers. They need to build homes for Londoners to live in, not assets for investors and tax accountants.

“He should also lobby government for full transparency and tighter rules to block tax avoidance, including requiring that the beneficial owner is declared for all property and land in the UK.”

Mr Johnson has said it would be wrong to “slam the door” on rich foreigners buying property in London and added that the best way to address the housing shortage was to increase supply.

His deputy mayor for housing and land, Richard Blakeway, said: “London is a global city and has for decades had an international element to its property market focused on the prime central area. Inward investment boosts our economy and creates jobs.

“It has helped to support the current house-building boom and the delivery of a record number of affordable homes for low-income Londoners, with the Mayor building 100,000 low-cost homes over his mayoralty.

“Mr Johnson has been clear that homes built should be marketed to Londoners first and every major developer has signed that agreement.

“The Bank of England has estimated the number of homes sold to overseas buyers is about three per cent across the whole market.”

The volume of purchases through “corporate entities” has slowed dramatically since 2013 after Chancellor George Osborne introduced hefty tax penalties in successive Budgets.

Private Eye linked more than 100,000 land title register entries to specific addresses around the country.